This Morning: ADBE Jumps, Party Over for Sprint? Enthusiasm Wanes for BB10?

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of Adobe Systems (ADBE) are up $2.71, or almost 6%, at $46.07, after the company last night narrowly exceeded fiscal Q2 expectations, and forecast this quarter’s revenue and profit below consensus, but projected the year’s results slightly above what the Street has been modeling. The stock has gotten one upgrade this morning, that I can see, from Merrill Lynch‘s Kash Rangan, who raised his rating on the shares to Buy from Neutral, with a $57 price target, up from $47, writing that he sees “Higher confidence in ADBE’s ability to convert a large portion of its Total Available Market of ~12mn installed license base of Creative Suite customers eventually into a potentially large several bn $ recurring rev stream.”

“This could arguably create one of the largest recurring rev streams in the software industry after MSFT, ORCL, SAP and CRM.”

Shares of BlackBerry (BBRY) are down 42 cents, or almost 3%, at $14.42, after Bernstein Research‘s Pierre Ferragu cut his rating on the stock to Underperform from Market Perform, and cut his price target to $10 from $15, writing that “expectations have scaled upwards materially” since the stock hit a low of $6.22 last year, but that the company’s sales of its BB10-based handsets will disappoint in the second half of this year, based on his “checks,” as “The initial enthusiasm that we observed for Blackberry 10 devices now appears to be waning.”

Ferragu models 10 million BB10 units the later half of BlackBerry’s fiscal 2014, below his prior 11-million estimate, which, with lower service revenue, would produce total sales of $5.77 billion the latter half of the year, below the $6.66 billion the Street is modeling.

Ferragu’s skepticism is joined by Pacific Crest‘s James Faucette, who writes that his own assessment suggests “BB10 production of 1.5 million to 2 million per month remains well above global sell-through demand, which we estimate at well below 500,000 per month.”

In other BlackBerry news, AT&T (T) this morning announced it will start selling the Q10 in the U.S. on June 21st for $199.99 with a two-year contract.

Shares of Sprint-Nextel (S) are down 25 cents, or almost 4%, at $7.07, after Dish Network (DISH) last night said it would drop its bid to merge with the company after a months-long battle against Japan’s Softbank (9984JP) for control of the carrier, instead focusing its attention on its battle for Sprint’s broadband partner, Clearwire (CLWR).

Sprint stock got one downgrade this morning, that I can see, from Macquarie Equities Research‘s Kevin Smithen, who cut his rating to Neutral from Outperform advising that as attention shifts from M&A to fundamentals, the road ahead will be a challenging one, for “Given the uncertainty over CLWR, we think it will take at least a year to get Sprint’s network to a level from which Son-San can offer some disruptive promotions.

Cisco Systems (CSCO) overnight released results of a new report on what it calls “the Internet of Everything,” a combination of the concept of the Internet of Things, widely bandied about, and also interactions between people and things via networks. The survey, which was conducted online by panel organizer GMI, with design input from Massachusetts Institute of Technology, surveyed 7,500 respondents around the world in different industries over a three month period recently. Cisco concludes from the research that there is $613 billion in corporate profit that will be generated from such interactions this year, out of what it argues is a total $14.4 trillion in “value at stake” over the decade running through 2022. All documents pertaining to the study are available on the Cisco site.

Much of the value of the Internet of Everything will accrue to Cisco to the extent that it is able to bundle equipment and software together with services to achieve a variety of “use cases.”

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There are 3 comments

JUNE 19, 2013 10:38 A.M.

Jeff wrote:

A $10 target is well below book value. A drop of $5 in the target stock price? A little harsh considering many other "analysts" have upgraded.

In any case, this stock in not very likely to hit $10, but it is very likely to hit $15.

JUNE 19, 2013 10:51 A.M.

SunnyCheng wrote:

It is very consistent every time BBRY stock goes up always follow up by the next day or two with negative news to drive down the price. Most Wall Street analysts that are pessimistic about BlackBerry has nothing to prove their points but saying based on our check, that's it. The Seeking Alpha articles are better written than these Wall Street analysts because their articles are written with facts. I wish Security Exchange put strict rules on these Wall Street analysts. Well, it is only 7 more days to find out who is right or wrong.

JUNE 19, 2013 11:27 A.M.

Eli wrote:

I think the bulls are focused on shipment numbers while the bears focus on sell thru numbers. sell thru is ultimately what matters and seeing the z10 slow down dramatically is not a good omen. The high end smartphone market is saturated with excellent competitors. Very difficult to execute a comeback against that backdrop and the inevitable decline coming in service revenues.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.